Relating to the continuation and operation of a health care provider participation district created by certain local governments to administer a health care provider participation program.

89(R) HB 3505 - Enrolled version - Bill Text

H.B. No. 3505

AN ACT

relating to the continuation and operation of a health care

provider participation district created by certain local

governments to administer a health care provider participation

program.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle D, Title 4, Health and Safety Code, is

amended by adding Chapter 300C to read as follows:

CHAPTER 300C.

HEALTH CARE PROVIDER PARTICIPATION DISTRICTS CREATED

BY CERTAIN LOCAL GOVERNMENTS

SUBCHAPTER A.

GENERAL PROVISIONS

Sec.

300C.0001.

PURPOSE. The purpose of this chapter is to

authorize a health care provider participation district created by

certain local governments to administer a health care provider

participation program to provide additional compensation to

certain hospitals in the district by collecting mandatory payments

from each of those hospitals in the district to be used to provide

the nonfederal share of a Medicaid supplemental payment program and

for other purposes as authorized under this chapter.

Sec. 300C.0002. DEFINITIONS. In this chapter:

(1)

"Board" means the board of directors of a

district.

(2) "Director" means a member of the board.

(3)

"District" means a health care provider

participation district created under Chapter 300A and operating

under this chapter.

(4)

"Institutional health care provider" means a

nonpublic hospital that provides inpatient hospital services.

(5)

"Local government" means a hospital district,

county, or municipality to which this chapter applies.

(6)

"Paying hospital" means an institutional health

care provider required to make a mandatory payment under this

chapter.

(7)

"Program" means a health care provider

participation program authorized by this chapter.

Sec.

300C.0003.

APPLICABILITY. This chapter applies only

to a local government that jointly created a health care provider

participation district by concurrent order under Chapter 300A and

is:

(1)

a county with a population of more than 80,000 and

less than 90,000 that borders the Trinity River;

(2)

a county with a population of more than 45,000 and

less than 55,000 that borders Oklahoma; or

(3)

a hospital district located in a county that has a

population of more than 30,000 and contains a portion of Jim Chapman

Lake.

SUBCHAPTER B. OPERATION AND DISSOLUTION OF DISTRICT

Sec.

300C.0021.

OPERATION. (a)

A health care provider

participation district created under Chapter 300A may operate under

and be governed by the provisions of this chapter instead of Chapter

300A if:

(1)

each local government that jointly created the

district adopts a concurrent order authorizing the district to

operate under and be governed by the provisions of this chapter; and

(2)

the district's board ratifies the concurrent order

adopted by each participating local government.

(b)

A concurrent order authorizing a district to operate

under this chapter must:

(1)

be approved by the governing body of each

participating local government;

(2)

contain provisions that are identical to the

provisions of the concurrent order adopted by each other

participating local government;

(3)

affirm that the district's territory is the area

contained within the boundaries of each participating local

government; and

(4)

provide that the district begins to operate under

this chapter immediately on the expiration of the district's

authority to administer and operate a program under Chapter 300A.

Sec.

300C.0022.

POWERS. (a) A district may authorize and

administer a health care provider participation program in

accordance with this chapter.

(b)

Notwithstanding Section 300A.0155, a district that

complies with the provisions of this chapter may administer and

operate a health care provider participation program under this

chapter after its authority to administer and operate a program

under Chapter 300A has expired.

Sec.

300C.0023.

BOARD OF DIRECTORS. (a) If three or more

local governments adopt concurrent orders authorizing a health care

provider participation district to operate under this chapter, the

presiding officer of the governing body of each local government

that created the district shall appoint one director.

(b)

If two local governments adopt concurrent orders

described by Subsection (a):

(1)

the presiding officer of the governing body of the

most populous local government shall appoint two directors; and

(2)

the presiding officer of the governing body of the

local government not described by Subdivision (1) shall appoint one

director.

(c)

Directors serve staggered two-year terms, with as near

as possible to one-half of the directors' terms expiring each year.

(d)

A vacancy in the office of director shall be filled for

the unexpired term in the same manner as the original appointment.

(e)

The board shall elect from among its members a president

and a vice president.

(f)

The president may vote and may cast an additional vote

to break a tie.

(g)

The board shall appoint a secretary, who need not be a

director.

(h) Each officer of the board serves for a term of one year.

(i)

The board shall fill a vacancy in a board office for the

unexpired term.

(j)

A majority of the members of the board voting must

concur in a matter relating to the business of the district.

Sec.

300C.0024.

QUALIFICATIONS FOR OFFICE. (a) To be

eligible to serve as a director, a person must be a resident of the

local government that appoints the person.

(b) An employee of the district may not serve as a director.

Sec.

300C.0025.

COMPENSATION. (a) Directors and officers

serve without compensation but may be reimbursed for actual

expenses incurred in the performance of official duties.

(b) Expenses reimbursed under this section must be:

(1)

reported in the district's minute book or other

district records; and

(2) approved by the board.

Sec.

300C.0026.

AUTHORITY TO SUE AND BE SUED. The board may

sue and be sued on behalf of the district.

Sec.

300C.0027.

DISTRICT FINANCES. (a) Except as

otherwise provided by this section, Subchapter F, Chapter 287,

applies to a district in the same manner that the provisions of that

subchapter apply to a health services district created under

Chapter 287.

(b) Sections 287.129 and 287.130 do not apply to a district.

(c)

This section does not authorize a district to issue

bonds.

Sec.

300C.0028.

DISSOLUTION. A district shall be dissolved

if the local governments that created the district adopt concurrent

orders to dissolve the district and the concurrent orders contain

identical provisions.

Sec.

300C.0029.

ADMINISTRATION OF PROPERTY, DEBTS, AND

ASSETS AFTER DISSOLUTION. (a) After dissolution of a district

under Section 300C.0028, the board shall continue to control and

administer any property, debts, and assets of the district until

all of the district's property and assets have been disposed of and

all of the district's debts have been paid or settled.

(b)

As soon as practicable after the dissolution of the

district, the board shall transfer to each institutional health

care provider in the district the provider's proportionate share of

any remaining money in any local provider participation fund

created by the district.

(c)

If, after administering the district's property and

assets, the board determines that the property and assets are

insufficient to pay the debts of the district, the district shall

transfer the remaining debts to the local governments that created

the district in proportion to the money contributed to the district

by each local government, including a paying hospital in the local

government.

(d)

If, after complying with Subsections (b) and (c) and

administering the district's property and assets, the board

determines that unused money remains, the board shall transfer the

unused money to the local governments that created the district in

proportion to the money contributed to the district by each local

government, including a paying hospital in the local government.

Sec.

300C.0030.

ACCOUNTING AFTER DISSOLUTION. After the

district has paid or settled all its debts and has disposed of all

its property and assets, including money, as prescribed by Section

300C.0029, the board shall provide an accounting to each local

government that created the district. The accounting must show the

manner in which the property, assets, and debts of the district were

distributed.

SUBCHAPTER C. HEALTH CARE PROVIDER PARTICIPATION PROGRAM; POWERS

AND DUTIES OF DISTRICT BOARD

Sec.

300C.0051.

HEALTH CARE PROVIDER PARTICIPATION

PROGRAM. The board of a district may authorize the district to

participate in a health care provider participation program on the

affirmative vote of a majority of the board, subject to the

provisions of this chapter.

Sec.

300C.0052.

LIMITATION ON AUTHORITY OF BOARD TO REQUIRE

MANDATORY PAYMENT. (a) The board may require a mandatory payment

authorized under this chapter by an institutional health care

provider in the district only in the manner provided by this

chapter.

(b)

The board may not require a mandatory payment under this

chapter during a period for which the board requires a mandatory

payment under Chapter 300A.

Sec.

300C.0053.

RULES AND PROCEDURES. The board may adopt

rules relating to the administration of the health care provider

participation program in the district, including collection of the

mandatory payments, expenditures, audits, and any other

administrative aspects of the program.

Sec.

300C.0054.

INSTITUTIONAL HEALTH CARE PROVIDER

REPORTING. (a)

If the board authorizes the district to participate

in a health care provider participation program under this chapter,

the board shall require each institutional health care provider

located in the district to submit to the district a copy of any

financial and utilization data required by and reported to the

Department of State Health Services under Sections 311.032 and

311.033 and any rules adopted by the executive commissioner of the

Health and Human Services Commission to implement those sections.

(b)

The board may inspect the records of an institutional

health care provider in the district to the extent necessary to

ensure compliance with the requirements of Subsection (a).

SUBCHAPTER D. GENERAL FINANCIAL PROVISIONS

Sec.

300C.0101.

HEARING. (a) In each year that the board

authorizes a health care provider participation program under this

chapter, the board shall hold a public hearing on the amounts of any

mandatory payments that the board intends to require during the

year and how the revenue derived from those payments is to be spent.

(b)

Not later than the fifth day before the date of the

hearing required under Subsection (a), the board shall publish

notice of the hearing in a newspaper of general circulation in each

local government that created the district and provide written

notice of the hearing to the chief operating officer of each

institutional health care provider in the district.

(c)

A representative of a paying hospital is entitled to

appear at the public hearing and be heard regarding any matter

related to the mandatory payments authorized under this chapter.

Sec.

300C.0102.

LOCAL PROVIDER PARTICIPATION FUND;

DEPOSITORY. (a) The board shall deposit all mandatory payments

received by a district in the local provider participation fund

created by the district under Chapter 300A.

(b)

The board may designate one or more banks as the

depository for the district's local provider participation fund.

(c)

The board may withdraw or use money in the district's

local provider participation fund only for a purpose authorized

under this chapter.

(d)

All funds collected under this chapter shall be secured

in the manner provided for securing other funds of the local

governments that created the district.

Sec.

300C.0103.

DEPOSITS TO FUND; AUTHORIZED USES OF MONEY.

(a) The local provider participation fund described by Section

300C.0102 consists of:

(1)

all revenue received by the district attributable

to mandatory payments authorized under this chapter, including any

penalties and interest attributable to delinquent payments;

(2)

money received from the Health and Human Services

Commission as a refund of an intergovernmental transfer described

by Subsection (b)(1), provided that the intergovernmental transfer

does not receive a federal matching payment;

(3)

money received by the district and deposited to

the fund in accordance with Chapter 300A that remains in the fund on

the date the district begins to operate under this chapter; and

(4) the earnings of the fund.

(b)

Money deposited to the local provider participation

fund may be used only to:

(1)

fund intergovernmental transfers from the

district to the state to provide the nonfederal share of Medicaid

payments for:

(A)

uncompensated care payments to nonpublic

hospitals, if those payments are authorized under the Texas

Healthcare Transformation and Quality Improvement Program waiver

issued under Section 1115 of the federal Social Security Act (42

U.S.C. Section 1315), or a successor waiver program authorizing

similar Medicaid supplemental payment programs;

(B)

uniform rate enhancements for nonpublic

hospitals in the Medicaid managed care service area in which the

district is located;

(C)

payments available under another waiver

program authorizing payments that are substantially similar to

Medicaid payments to nonpublic hospitals described by Paragraph (A)

or (B); or

(D)

any reimbursement to nonpublic hospitals, or

that may benefit nonpublic hospitals as determined by the board,

for which federal matching funds are available;

(2)

subject to Section 300C.0151(d), pay the

administrative expenses of the district in administering the

program, including collateralization of deposits;

(3)

refund all or a portion of a mandatory payment

collected in error from a paying hospital, regardless of whether

the payment was collected under this chapter or Chapter 300A; and

(4)

refund to paying hospitals a proportionate share

of the money that the district:

(A)

receives from the Health and Human Services

Commission that is not used to fund the nonfederal share of Medicaid

supplemental payment program payments; or

(B)

determines cannot be used to fund the

nonfederal share of Medicaid supplemental payment program

payments.

(c)

Money in the local provider participation fund may not

be commingled with other district money or other money of a local

government that created the district.

(d)

Notwithstanding any other provision of this chapter,

with respect to an intergovernmental transfer of funds described by

Subsection (b)(1) made by the district, any funds received by the

state, district, or other entity as a result of the transfer may not

be used by the state, district, or any other entity to expand

Medicaid eligibility under the Patient Protection and Affordable

Care Act (Pub. L. No.

111-148) as amended by the Health Care and

Education Reconciliation Act of 2010 (Pub. L. No.

111-152).

Sec.

300C.0104.

ACCOUNTING. The district shall maintain an

accounting of the money received from each local government that

created the district, including a paying hospital located in a

hospital district, county, or municipality that created the

district, as applicable.

SUBCHAPTER E. MANDATORY PAYMENTS

Sec.

300C.0151.

MANDATORY PAYMENTS BASED ON PAYING HOSPITAL

NET PATIENT REVENUE. (a) Except as provided by Subsection (e), if

the board authorizes a health care provider participation program

under this chapter, the district shall require an annual mandatory

payment to be assessed on the net patient revenue of each

institutional health care provider located in the district.

The

board shall provide that the mandatory payment is to be assessed at

least annually, but not more often than quarterly. In the first

year in which the mandatory payment is required, the mandatory

payment is assessed on the net patient revenue of an institutional

health care provider located in the district as determined by the

data reported to the Department of State Health Services under

Sections 311.032 and 311.033 in the most recent fiscal year for

which that data was reported. If the institutional health care

provider did not report any data under those sections, the

provider's net patient revenue is the amount of that revenue as

contained in the provider's Medicare cost report submitted for the

previous fiscal year or for the closest subsequent fiscal year for

which the provider submitted the Medicare cost report. The

district shall update the amount of the mandatory payment on an

annual basis.

(b)

The amount of a mandatory payment authorized under this

chapter must be uniformly proportionate with the amount of net

patient revenue generated by each paying hospital in the district.

A health care provider participation program authorized under this

chapter may not hold harmless any institutional health care

provider, as required under 42 U.S.C. Section 1396b(w) and 42

C.F.R. Section 433.68.

(c)

The board shall set the amount of a mandatory payment

authorized under this chapter. The aggregate amount of the

mandatory payments required of all paying hospitals in the district

may not exceed six percent of the aggregate net patient revenue from

hospital services provided by all paying hospitals in the district.

(d)

Subject to Subsection (c), the board shall set the

mandatory payments in amounts that in the aggregate will generate

sufficient revenue to cover the administrative expenses of the

district for activities under this chapter and to fund an

intergovernmental transfer described by Section 300C.0103(b)(1).

The annual amount of revenue from mandatory payments that shall be

paid for administrative expenses by the district for activities

under this chapter may not exceed $150,000, plus the cost of

collateralization of deposits, regardless of actual expenses.

(e)

A paying hospital may not add a mandatory payment

required under this section as a surcharge to a patient.

(f)

For purposes of any hospital district that participates

in a district authorized to operate under this chapter, a mandatory

payment assessed under this chapter is not a tax for hospital

purposes for purposes of the applicable provision of Article IX,

Texas Constitution.

Sec.

300C.0152.

ASSESSMENT AND COLLECTION OF MANDATORY

PAYMENTS. (a) The district may designate an official of the

district or contract with another person to assess and collect the

mandatory payments authorized under this chapter.

(b)

The person charged by the district with the assessment

and collection of mandatory payments shall charge and deduct from

the mandatory payments collected for the district a collection fee

in an amount not to exceed the person's usual and customary charges

for like services.

(c)

If the person charged with the assessment and collection

of mandatory payments is an official of the district, any revenue

from a collection fee charged under Subsection (b) shall be

deposited in the district's general fund and, if appropriate, shall

be reported as fees of the district.

Sec.

300C.0153.

LIMITATION ON AUTHORITY; CORRECTION OF

INVALID PROVISION OR PROCEDURE. (a) This chapter does not

authorize the district to assess and collect mandatory payments for

the purpose of raising general revenue or any amount in excess of

the amount reasonably necessary to:

(1)

fund the nonfederal share of a Medicaid

supplemental payment program or Medicaid managed care rate

enhancements for nonpublic hospitals; and

(2)

cover the administrative expenses of the district

associated with activities under this chapter and other uses of the

fund described by Section 300C.0103(b).

(b)

The district may assess and collect a mandatory payment

authorized under this chapter only if a waiver program, uniform

rate enhancement, or reimbursement described by Section

300C.0103(b)(1) is available to the district.

(c)

To the extent any provision or procedure under this

chapter causes a mandatory payment authorized under this chapter to

be ineligible for federal matching funds, the board may provide by

rule for an alternative provision or procedure that conforms to the

requirements of the federal Centers for Medicare and Medicaid

Services. A rule adopted under this section may not create, impose,

or materially expand the legal or financial liability or

responsibility of the district or an institutional health care

provider in the district beyond the provisions of this chapter.

This section does not require the board to adopt a rule.

Sec.

300C.0154.

REPORTING REQUIREMENTS. (a) The board of a

district that authorizes a program under this chapter shall report

information to the Health and Human Services Commission regarding

the program on a schedule determined by the commission.

(b) The information must include:

(1)

the amount of the mandatory payments required and

collected in each year the program is authorized;

(2)

any expenditure or other use of money attributable

to mandatory payments collected under this chapter, including:

(A)

any contract with an entity for the

administration or operation of a program authorized by this

chapter; or

(B)

a contract with a person for the assessment

and collection of a mandatory payment as authorized under Section

300C.0152; and

(3)

the amount of money attributable to mandatory

payments collected under this chapter that is used for a purpose

other than a purpose described by Subdivisions (1) and (2).

(c)

The executive commissioner of the Health and Human

Services Commission shall adopt rules to administer this section.

Sec.

300C.0155.

AUTHORITY TO REFUSE FOR VIOLATION. The

Health and Human Services Commission may refuse to accept money

from a local provider participation fund administered under this

chapter if the commission determines that acceptance of the money

may violate federal law.

Sec.

300C.0156.

INTEREST AND PENALTIES. The district may

impose and collect interest and penalties on delinquent mandatory

payments assessed under this chapter in any amount that does not

exceed the maximum amount authorized for other delinquent payments

owed to the local governments that created the district.

SECTION 2. A director of a district appointed, or a board

officer elected, under Chapter 300A, Health and Safety Code, may

continue to serve the remainder of the director's or officer's term

in accordance with that chapter after the district begins to

operate under Chapter 300C, Health and Safety Code, as added by this

Act. A director or board officer that serves on the board of

directors of a health care provider participation district created

under Chapter 300A, Health and Safety Code, is eligible for

reappointment or re-election, as applicable, under Chapter 300C,

Health and Safety Code, as added by this Act, unless otherwise

disqualified.

SECTION 3. If before implementing any provision of this Act

a state agency determines that a waiver or authorization from a

federal agency is necessary for implementation of that provision,

the agency affected by the provision shall request the waiver or

authorization and may delay implementing that provision until the

waiver or authorization is granted.

SECTION 4. This Act takes effect immediately if it receives

a vote of two-thirds of all the members elected to each house, as

provided by Section 39, Article III, Texas Constitution. If this

Act does not receive the vote necessary for immediate effect, this

Act takes effect September 1, 2025.

______________________________

______________________________

President of the Senate

Speaker of the House

I certify that H.B. No. 3505 was passed by the House on May 6,

2025, by the following vote: Yeas 118, Nays 28, 1 present, not

voting.

______________________________

Chief Clerk of the House

I certify that H.B. No. 3505 was passed by the Senate on May

25, 2025, by the following vote: Yeas 30, Nays 1.

______________________________

Secretary of the Senate

APPROVED: _____________________

Date

_____________________

Governor